Tiger Global ups the ante on Wikimart
Tiger Global which has stakes in Yandex and the Mail.ru Group has brought its total investment in Wikimart.ru – intended to be a competitor for Amazon.com as an online trade platform – to $12 million, after originally investing $5 million in May 2010. The additional funds will be focused on administrative expenses and online-marketing.
The Wikimart idea was initiated by Russian and Kazakh Stanford University graduates in 2008 looking to create an Amazon like online retail platform and business model in the Russian language world similar to the models pushed in Korea by Gmarket and in Japan by Rakuten Ichiba.
Wikimart has attracted funds from investors with Tiger Global Investment fund the core investor in the business. Wikimart co-founder, Camil Kurmakayev, says the hands off approach by Tiger was a key factor in selecting them.
“We choose Tiger because they did not impose their views and did not seek to participate in the business management, but are ready for the long-term partnership. Now the share of Tiger in Wikimart is already above 50%.”
Wikimart is intended to become an online mall, bringing retailers and customers together online. The number of buyers and retailers is growing with more than 528 thousand products offered by more than 2200 retailers. Wikimart Director of Public Relations,Tatiana Patratskaya-Gulyaev, says the platform helps retail business to increase sales with improved access to a younger tech savvy internet buying customer.
“Wikimart is an additional online channel for retail chains to reach the consumers which above all invests in search engine optimization. Wikimart revenue is based on advertisement and 3 to 30% commission on transactions.”
Ludmila Semushina PR-manager Belyi Veter Tsifrovoi retail network says the service provided an additional flow of customers.
“Wikimart is more than a showcase for our products. It has contributed into client base expansion and helped to increase sales revenue”
Mikhail Osin, Representative of Ozon.ru, believes the project is gaining momentum and seems to have good future prospects.
“The market will be divided between 1-2 large online multi stores with their own warehouse and delivery, and a dozen mid-size stores with the rest of online trade space occupied by such multi service providers as Wikimart.”
Alexey Minaev, analyst Rye, Man & Gor Securities, says the start up may become attractive for strategic investors as the internet expansion in Russia takes hold.
“The internet service is rapidly developing and expanding in Russia and globally with more companies join online start ups. However, the share of internet users in Russia is still weak but expected to grow approximately by 10% each year. Experts predict another internet wave and it is not a surprise since this decade is marked as a new era of virtual and internet invasion. Russian market lacks online services such as Wikimart, Darberry that eventually became successful analogs of international services. I think if Wikimart will increase its popularity and continue boost profits it might be soon addressed by strategic investor, notably, Amazon or Ebay who will be interested to acquire Russian business as happened with Darberry and Groupon. Foreign investors already involved in the project such as Tiger Global is very familiar with Russian internet market ventures and can be a positive omen for other investors. ”